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They are talking about modifying their Droids with a custom made ROM that allows the user to use custom features such as overclocking the CPU which simply means pushing the Droid's CPU to levels not originally set by Motorola. While it does increase the speed of the Droid because the CPU is processing at a faster rate, it may cause damage to the CPU due to overheating which most likely would void the factory warranty.
Almost everything on this site void's the warranty's policies. Honestly, I don't think they'd know you did anything though if you changed everything back to stock though!
Overclocking kicks ass. It makes everything much faster, and scrolling is near smooth as the iPhone. Some people can pull off 1.3 GHz but mine only hit around 1 stable (all CPUs are different). I guess it might screw up your phone, but there's really no proof.
The "Bugless Beast 2.1" is a type of ROM which can decide some of the features of your phone and how smooth it runs. They can't hurt, unless you screw up. There's many great roms... like Bugless Beast 2.1 . You can run into issues though!
Almost everything on this site void's the warranty's policies. Honestly, I don't think they'd know you did anything though if you changed everything back to stock though!
Get familiar with your phone before you decide what you want to do with it. You NEED a baseline performance so you know what 'normal' is. Happy Droiding.